Blog Post

You will have seen in the news last week the recent announcement by the Government regarding changes to the rules around personal injury payments. It means that the cost of personal injury claims will increase hugely. For example, the award made to a 27 year old female with a serious life-changing injury could move from £6.5m under the old rules to nearly £14m under the new ones.

This is just one example but the implications are clear. This decision means that as large personal injury claims are more random, the cost of insurance for around 40 million motorists and businesses will have to increase to cover the higher pay-outs.

This reform takes effect on 20 March 2017 but will also be applied retrospectively to existing claims settled after 20 March 2017. Taking into account the volume of existing claims, there is an expected overall cost to the insurance industry on day one of around £7bn. Clearly, it is impossible for insurers to absorb this sudden and significant cost.

Over the coming days, motor insurance premiums for new and existing customers will rise.

What happens next?

The insurance industry is engaging with the Government to make sure they understand the effect this decision will have on millions of people. Following a meeting between the Chancellor and industry leaders, we welcome their commitment to review the process.

The insurance industry will continue to make its voice heard to ensure that in the future, personal injury discount rates are set at a level that is fair to both the injured and consumers.

In the meantime, we as a business are actively working on how we manage this sudden cost. We will do this whilst maintaining prices that reflect the cost of insurance in the wake of this decision and maintaining the service levels that we are proud to provide.

About Diamond

At Diamond Insurance, we are very well known for our specialist focus on offering first-class business and commercial insurance. We also offer the same exacting standards at highly competitive rates for a wide range of insurance including general motor, classic and collectable vehicles, home, and travel insurance.